Libya's path from desert to modern country – complete with ice rink

Libya, a one-time global pariah whose leader's son is sponsoring an aid boat to Gaza this week, has seen dramatic economic progress since the lifting of sanctions for funding terrorism, nuclear proliferation. Is this a model for Iran and North Korea?

From shiny new Hyundais cruising the capital’s wide palm-lined boulevards to cranes dotting the Mediterranean skyline, the long-time pariah is getting a modern face.

Seven years after the international community formally lifted the stringent sanctions it had imposed for state-sponsored terrorism, Libya has not only found its feet but is attracting international investment as well.

“There was huge interest by British and European countries in getting back, but the rewards in terms of contracts were quite slow in coming,” says Sir Richard Dalton, who was serving as British ambassador to Libya in 1999 when the sanctions were initially suspended. “[There’s] now on the economic side a pretty unstoppable momentum.... It’s the place to be,” says Dalton, now an analyst at Chatham House in London.

Libya’s nominal gross domestic product (GDP) rose from 16.7 billion dinars ($12.8 billion) in 1999 to 114 billion dinars in 2008, according to the International Monetary Fund (IMF). The year after the US lifted sanctions, the country’s economy surged 10.3 percent in 2005. Foreign direct investment increased more than 50 percent from $1.5 billion in 2000 to $2.3 billion in 2007, according to the World Bank.

Ice rink and a 22-lane bowling alley

With oil money filling government coffers, the state is undertaking massive infrastructure projects, doling out international contracts for ambitious housing developments, constructing a national railway network, and slowly opening the country to private foreign investment.

In Tripoli, the capital, cement skeletons along the city’s airport road will soon be sleek luxury high-rises as Libya tackles a 500,000 unit housing shortage. Known as the Bab Tripoli complex, the government-funded plush Turkish development is valued at some $1.3 billion and is set to be completed in November 2011. It boasts 115 buildings with 2,018 apartments as well as office spaces, and a giant mall complete with a 22-lane bowling alley, a movie theater, a five-star hotel.

“They will have ice rinks, they will have bowling allies,” says Afrin Canbolat, field engineer manager on the project. “They will also enjoy [life] like the rest of the free world.”

'It takes a long time to move on'

The United Nations placed sanctions on the country in 1992 because of Libyan leader Col. Muammar Qaddafi’s refusal to hand over two suspects in the 1988 bombing of Pan Am flight 103 over Lockerbie, Scotland, that killed 270. A stringent no-fly ban prevented plane travel to and from the country, prices of goods were higher, and a generation of Libyans endured difficulties trying to study or work abroad.

“It was very hard,” says Enass Ahmeda, editor of the private Oyeu newspaper. She recalls “a lack of medicine [and] a lack of development in every field” during the embargo, which the UN suspended in 1999 after Libya agreed to hand over the Lockerbie bombing suspects. The UN then formally lifted sanctions in 2003; the US followed the next year by lifting its own sanctions when Libya renounced its nuclear program.

In Benghazi, Libya’s second-largest city, two government-funded housing projects consisting of 20,000 units, costing approximately $4.8 billion, are half way to completion. At the Ghanfuda New Town site, eight miles south of the center of the city, row upon row of apartment block frames jut out of the desert. American AECOM and South Korean HanmiParsons manage the site, while China State Construction Company handles the building. To meet the needs of the 15,000 apartments and 5,000 villas, the group constructed their own concrete factories.

Oil exports account for 70 percent of GDP

Much of the new growth is fueled by Libya’s vast oil reserves. Before international sanctions, Libya exported 3 billion barrels per day. Today, the country produces 1.5 billion barrels per day – the maximum allowed by the Organization of the Petroleum Exporting Countries (OPEC), with reserves to last 45 years at current rates, according to information provided by the National Oil Corporation (NOC).

The export of hydrocarbons accounts for 70 percent of the gross domestic product and provides 90 percent of the government’s revenue. By 2016, NOC chairman Shokri Ghanem says, they hope to boost oil exports to 2.4 billion barrels per day.

Libya’s economic expansion is not without its pitfalls. As in other countries with oil-based economies, volatile crude prices and the economic downturn have reduced growth. Libya’s GDP contracted from 114 billion dinars in 2008 to a projected 95.7 billion dinars in 2010, according to IMF estimates.

Share the wealth?

To combat income disparity and alleviate the growing pains of privatization, the Libyan government has set up social fund to provide 222,000 families approximately $377 dollars per month from investment funds financed by oil profits.

Libya’s small population of 6.2 million makes income distribution in the oil-wealthy state easier than most, but some say it’s still not enough. “There is money, but not for me,” says a taxi driver in Tripoli who did not want to be named. “There is no work, except driving this taxi.... They [the government] take the money.”

The overall success of Libyan reintegration has prompted American policymakers to make a case for the use of sanctions to pressure other countries with nuclear ambitions, such as Iran and North Korea.

“We’d like to be able to use the example of Libya as one which can be kind of applied to other instances,” says US ambassador to Libya Gene Cretz, whose arrival here in April 2008 reestablished US diplomatic relations after nearly four decades. He says the Libyan case can serve as an example to show that countries can gain from renouncing their nuclear ambitions.

“You can benefit by giving up your WMD you don’t have to go that route, there is a way back into the international community.”